By Robb M. Stewart


OTTAWA--Canada's job market jolted back to life last month with a surge in hiring that pulled the unemployment rate to its lowest since the start of the year.

Employers in the country added 87,800 jobs in May, Statistics Canada said Friday. That was the strongest single month since the start of 2024, and rolled back a chunk of the more than 112,000 jobs lost between January and April.

As a result, the unemployment rate declined to 6.6% following the steady rise this year to a six-month high of 6.9% in April.

The consensus forecast among economists had been for an unchanged jobless rate and a thin 10,000 rise in employment.

The jobs data is one of the last major indicators to be released before the central bank's policy committee meets next week, and it comes on the heels of data showing the economy contracted for a second straight quarter in the first three months of the year.

Bank of Canada external deputy governor Nicolas Vincent in a speech late last month characterized the labor market as one of low-hire, low-fire. Employment growth has slowed since last year as the economy has struggled, hit by tighter immigration policies and tariff uncertainty, but there haven't been large-scale layoffs.

Recent business surveys have painted a mixed picture for the job market. The Canadian Federation of Independent Business's monthly barometer found a higher share of employers plan to lay off staff than to hire, but job site Indeed's research showed summer job postings as of early May were up 4% on last year following declines the last three years.

May marked the first significant employment gain for the country since November. Compared with a year earlier, employment was up by 147,100 for the month.

All of the job gains recorded in May were among full-time workers and were led by the private sector. Students also saw a better start to the summer job market than they did last year, Statistics Canada said.

When calculated using U.S. Labor Department methodology, Canada's unemployment rate was 0.3 percentage point lower at 5.4%.

Full-time employment jumped by 154,000, countering the roughly 156,000 full-time roles lost from January to April. Part-time roles were down by 66,200 in May.

The employment rate, or the proportion of the working-age population that is employed, rose by 0.2 percentage point to 60.7% for the month--the first increase since November. Year over year, the employment rate was unchanged.

As employment recovered, so did the job-finding rate. Just over one-quarter of people who were unemployed the month before found work in May, up 3.7 percentage points on a year prior though still below the pre-pandemic average of 31.5% seen from 2017 to 2019.

The layoff rate remained relatively stable at 0.6%, little changed from before the pandemic, the data agency said.

Employment rose across a number of industries in May, led by about a 27,000 rise in construction work. Despite this, jobs in construction were little changed compared with last year.

Manufacturing also saw gains, with some 15,000 roles added. Employment in manufacturing was steady compared with a year earlier, but down by about 44,000 from January 2025 after being squeezed by uncertainty and U.S. tariffs.

The participation rate--the proportion of the working-age population who were either employed or unemployed--was unchanged in May at 65%.

At the same, wage growth continued to cool, even as consumer-price inflation has been stoked in recent months by the spike in energy prices. Average hourly wages for permanent employees rose 3.2% on a year earlier, softening from the 4.8% advance the month before and below the 4.6% rise economists expected.

Canada's economy unexpectedly stumbled in the early months of the year, with gross domestic product dipping 0.1% in the first quarter on an annualized basis, marking a second straight contraction after a 1% pullback in prior quarter. Still, early data collected by Statistics Canada has shown industry-level GDP rose a relatively solid 0.4% in April from the month before, driven by natural-resources industries.


Write to Robb M. Stewart robb.stewart@wsj.com


(END) Dow Jones Newswires

06-05-26 0932ET